Adam Smith, one of the leading figures of the 18th century Scottish intellectual enlightenment, liked free markets and restrained governments. The 21st century campaigns for and against a Scottish political liberation show that governments have acquired an economic importance which Smith could hardly have imagined.

If the government’s economic role was as limited as Smith would have liked, the debate preceding the Sept. 18 independence referendum would mostly have been about national identity and the advantages and difficulties of becoming a small country in a big world. The economy would hardly be an issue, since only the most rabid Scottish nationalist would accuse the English of cruelty in that domain.

In fact, though, the purely political issues seem less important than the question of what might be called political economy: would a Scottish government with full regulatory, fiscal and monetary control make the nation richer? The answers differ, of course, but there is a shared assumption that the government is right at the centre of the economy.

In a way, that is quite right. The remit of modern governments runs through the entire economy. They regulate, adjudicate and motivate. They are the largest employers and purchasers in any country. They run complicated welfare states. They build infrastructure, protect private property and make key investments. Their deficits help keep the economy on an even keel.

For Scotland, however, most of that hardly matters. This referendum is politically momentous, but economically nothing like the 1990 East German parliamentary election, in which voters chose to abandon the communist model for the West German social market. The Scottish nationalists are not planning any radical alterations to a British system which works pretty well.

In addition, any new Scottish government would be constrained by the limited amount of economic sovereignty available. These days, no nation is an island (although North Korea comes close). As Adam Smith would have hoped, there is extensive cross-border traffic in goods, services, capital, people and ideas. The demands of treaties and trading partners restrict the freedom of all national governments.

Big countries have more freedom than small ones, because the United States and China, with their GDPs of over $16 trillion, can make more plausible threats than Malaysia or Scotland, with GDP of about $300 billion. The best way for Edinburgh to protect the national self-interest will be to sacrifice some of it, to please powerful allies.

All in all, a new Scottish government should not find most parts of economic management challenging. It would simply have to follow best global practice. Rich countries have learned to cope fairly well with pretty much every type of economic challenge: natural disasters, revolutionary technologies, demographic shifts, even the tensions between rich and poor.

There is one major exception: finance. Governments frequently stumble in matters of money. Scotland is unlikely to be an exception.

The rapid spread of the financial crisis almost six years ago, and the painfully slow recovery since then, are unfortunately typical of the official inability to keep the financial sector in control. The litany of failures is a bit surprising, since the authorities have the power to create and destroy money and credit pretty much at will. However, ignorance reigns. Economists cannot agree on how to deal with the most basic issues of money, credit and financial markets.

An independent Scotland would have to find its way alone in this trackless forest. It might be forced into excessive austerity or fall into a bank or currency crisis. But independence would not really be responsible for any missteps. After all, if anyone actually knew how to keep monetary and banking systems safe and sound, there is every reason to think that Edinburgh, renowned for its financial expertise since shortly after Smith’s day, would be able to put that knowledge into action.

As it stands, though, financial uncertainty is by far the best economic reason to reject independence. Even if the authorities in London and Brussels want to lend a helping hand to the new nation – and that is far from a foregone conclusion – Edinburgh would have to win the confidence of a much more fickle group, global financial investors.

These short-sighted profit-seekers can be kept at bay, but only by building up substantial currency reserves and imposing capital controls to limit the flow of funds in and out of the country. The Scottish government would start out too poorly endowed for the first and its desire to join the EU rules out the second.

Although Adam Smith’s ruminations on finance are mostly outdated, he understood a basic truth about the risks that come with this dependence. Consider his comment on the Ayr Bank, which, as Smith scholar David Bholat explains, was a proto-central bank for Scotland. It failed in 1772, crushed by foreign lenders’ high interest rates. In Smith’s words: “In the long run, therefore, the operations of this bank increased the real distress of the country which it meant to relieve.”

Are authoritarian governments bad for the economy? Turkish voters do not seem to think so. On August 10, Tayyip Erdogan won an absolute majority in the country’s presidential election. Observers say that the country’s increasing prosperity is a big part of his AK Party’s appeal. Erdogan is not the only popular authoritarian around. Viktor Orban, who reportedly endorsed “illiberal” government, wins similar majorities in Hungary. If Russia had an election today, President Vladimir Putin would win big. And Xi Jinping, who seems to be making one-party rule in China more authoritarian, would undoubtedly triumph if the government bothered with elections.

The success of such leaders irritates many Americans and Western Europeans, who believe that genuine multi-party democracy is the natural political arrangement in the modern world. Clearly, though, most voters in some countries want authoritarian leaders who tolerate no effective opposition and who impose their vision on the nation.

Many economists think modern industrial prosperity ultimately requires a strong civil society, which can only really thrive in a democracy where parties vie for votes on the same footing. In other words, they think authoritarian economies are inherently unstable. If only it were that simple.

True, the authoritarians of the previous century mostly adopted an ultimately disastrous economic approach. Communists and fascists believed in tight state control. It seemed to work for a while in the Soviet Union, but ultimately collapsed. Modern authoritarian economics has moved on. It gives business enough freedom to prosper. The state does not smother the economy, just tries to guide it closely enough to ensure that the government and the nation are well served.

The execution is deeply imperfect, but certainly not disastrous. GDP growth has been extraordinary in China and pretty good in both Turkey and Hungary, where leaders of small- and medium-sized businesses are among the governments’ most fervent supporters. Businesses may be less enthusiastic in Russia, which is especially corrupt, but even there the economy has clearly done better than in the old Soviet days.

It is true that the big companies in these states must work more closely with the political authorities than their corporate peers in genuine multi-party democracies, but the similarities are greater than the differences. In all modern nations, the government sits at the centre of the economy. Its dictates and desires cannot be safely ignored, and its favour vastly increases the chance of economic success.

Indeed, while the new authoritarianism offers a clear political contrast with liberal democracy, the economic models are not as distinct as the system’s critics might like. Relative to the way things work in the United States or a European nation, the new authoritarian approach has both advantages and disadvantages.

The ultra-heavy-state’s main business plus is the weakness of political opposition to helpful economic change. In poor countries, traditional local authorities often hold back helpful development. Vested interests can also be an economic problem in richer democracies – just ask anyone who has tried to build a new airport or urban rail link. Strong governments can override them.

As long as the authoritarian government is reasonably well intentioned and competent, its ability to act can make a big economic difference. Much of China’s widening economic lead over India can be traced back to the differences in political style. Corruption is rampant in both countries, education is about equally prized and local authorities have roughly the same amount of autonomy. However, the central Chinese government clears far more paths for investment far more quickly.

Neo-authoritarianism also comes with some big economic disadvantages. Without strong non-government organisations, there is no one to restrain graft and corruption, so people in and close to the government can unjustly amass great fortunes and break laws with impunity. Also, while today’s strong leaders are far less megalomaniacal than Hitler or Stalin, they are still prone to overconfidence and grandiose ambitions. As they work in a sycophantic political environment, there is rarely anyone one willing to object forcefully to foolish plans.

Finally, neo-authoritarian governments generally care more about non-economic than economic goals. Putin and Xi are nationalists and Erdogan has a cultural and regional agenda. The economy may be harmed by the policies that spring from such ambitions. Russia is now in a trade war and China’s current intense scrutiny of foreign firms could prove economically self-defeating.

At present, the negatives of the new authoritarian economies probably outweigh the positives. That, however, does not mean the arrangement is doomed. When industrial democracies were new, many clever observers thought they were beset by impossible internal economic contradictions. Indeed, the first authoritarian economic model was in part a response to those supposed flaws. But the liberal system evolved and thrived. The new authoritarian economies may yet do the same.